Facing Foreclosure on Your Home? Consider Refinancing.
You never thought it would come down to facing foreclosure, but here it is and it’s not going to go away on its own.
Something needs to be done. If you are struggling to find a solution to financial problems, then you should cash in on your biggest investment: your home.
It might not seem obvious at first. There are a lot of expenses associated with refinancing, but it could prevent foreclosure and help in other ways, too. Refinancing is the best way to go about preventing a foreclosure. You can strategically use loans to get caught up on payments and to lower monthly expenses.
Finding the Balance
Trying to find the right balance of interest and term or if you should get a home equity loan or line of credit can be exhausting. In the end, you want to make sure you are coming out ahead. You need to factor in fees and closing costs and find the point where the mortgage refinance pays for itself. When is that? If you plan to live in the house beyond that time, refinancing can be very beneficial for you financially.
That’s really what it’s all about, right? The less you have to spend per month on the mortgage, the faster you can pay down debt and get back on the path to financial stability. Here are some reasons why you might consider refinancing.
- Convert between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
- Get a lower interest rate.
- Use your home’s value to your benefit by accessing your equity.
Fixed-Rate vs. Adjustable-Rate
If you have a fixed-rate mortgage, it means that your interest rate will stay the same unless you refinance. If the market is trending toward lower interest rates, it might be in your best interest to cash in on the savings. Even a couple of percentage points can make a big difference over the life of the loan.
If you have an adjustable-rate mortgage, it means that your interest changes. There is usually a promotional period with a very low interest rate, but once that time period is over, the payments increase, sometimes substantially, and create a hardship. If you’re about to get hit with a balloon payment, refinancing to a fixed-rate mortgage could save you money.
Using Your Equity
It’s important to understand how paying off debt can help you save your home. If you pay off outstanding balances, that’s more money you have every month. That’s the obvious benefit, but you are also saving money on the interest you would have paid as long as you carried the debt.
You’ve invested in your home and now your home can literally repay the favor. A home equity loan or line of credit can be used to get you caught up on your responsibilities and help prevent you from losing your investment.
Types of Refinancing
- Rate and Term: This type of refinancing is specifically designed to change the interest rate and/or the term (length) of the mortgage without adding any new money into the loan. It’s a renegotiation. The benefits come in what could be hundreds of thousands of dollars in savings over the lifetime of a loan.
- Cash Out: This is actually an entirely new loan that negates the previous one. This is the loan used to tap into your home’s equity. These are often favored because they typically have lower interest rates. You can use the balance to pay off debt, thus saving your home and improving your credit score.
How to Fight Foreclosure
Foreclosure proceedings can be stopped if a new loan is used to pay off the delinquent loan. It can be hard to find a good lender once payments have fallen behind or if there has been a drop in income. There are a lot of “quick fix” companies that take advantage of this stressful time.
Some circumstances may make refinancing a loan more difficult, so try to be proactive and apply for help as soon as you are aware of a potential default and make sure you choose your lender carefully. All of the math, fees and terms need to make sense before you sign anything.
A Cut Above
At Galaxy Lending Group, we pride ourselves on putting our clients first by making sure we communicate with you throughout the entire process, meet deadlines, and remain confidential.
If you would like a face-to-face consultation, call us at 855-595-1233 to set up an appointment, or fill out our online form.